By Claire West

Commenting on the Basel Committee on Banking Supervision recommendations on capital standards and liquidity requirements Angela Knight, chief executive of the British Bankers' Association, said:

"Once the new rules and requirements are in, this may well improve stability of banks and of the financial system. The transition though is the critical bit as the rules suck money out of the economy. Even though the UK banks are in a much stronger place than most on capital, the Basel changes need to be implemented over a long timetable and very carefully sequenced to avoid prolonging the downturn.
"The liquidity requirements are also significant, as these feed through to the price and the availability of lending."

"A bank is like any other business - if its fixed operating costs go up then so does the price of its product. All the changes are good from a stability perspective but add billions to the fixed operating cost of a bank. The consequence is that inevitably the cost of credit - the price the borrower pays for money - will rise. The cheap money era is over."